Terns Pharmaceuticals: The Market Has Already Priced In Clinical Success Before Trial Data

Terns Pharmaceuticals (TERN) is scheduled to report fourth-quarter 2025 earnings on April 2, 2026, with the biotech company facing a critical test as investors assess progress on its lead CML therapy TERN-701 following recent clinical data and regulatory discussions. The central question is whether management can demonstrate continued momentum in its pivotal trial planning and provide clarity on the competitive positioning against established therapies like asciminib, particularly as analyst sentiment has notably deteriorated over the past month despite the stock's strong technical performance.

Part 1: Earnings Preview

Terns Pharmaceuticals is a clinical-stage biopharmaceutical company focused on developing novel small-molecule therapies for oncology, with its lead candidate TERN-701 targeting chronic myeloid leukemia (CML) through an allosteric inhibition mechanism. The company's pipeline addresses significant unmet needs in CML treatment, where only 15%-20% of patients achieve treatment-free remission with current therapies.

TERN is expected to report Q4 2025 results on April 2, 2026, with analysts projecting a loss of $0.29 per share based on consensus from 6 estimates ranging from -$0.28 to -$0.33. The company most recently reported Q3 2025 earnings of -$0.27 per share, beating estimates of -$0.30 by 10.00%. Compared to the same quarter last year (Q4 2024), when TERN posted -$0.24 per share, the current estimate of -$0.29 represents a 20.83% increase in losses, reflecting heightened investment in clinical development.

Three key themes define this earnings story:

TERN-701 Clinical Progress and Pivotal Trial Design: Investors will scrutinize updates on the Phase I CARDINAL study, which showed 75% of patients achieving major molecular response (MMR) and 36% achieving deep molecular response (DMR) in expansion cohorts. Management's mid-year FDA meeting to discuss pivotal trial designs for both second-line and frontline settings represents a critical inflection point. The company has been expanding enrollment at 320 mg and 500 mg doses, with dose selection dependent on exposure-safety and exposure-efficacy analyses—any clarity on final dose selection and trial timelines will be market-moving.

Competitive Differentiation Against Asciminib: TERN-701's positioning against Novartis's asciminib, which currently holds about 25% frontline market share, is paramount. The company has emphasized higher target coverage and potency, including activity against F317L mutations resistant to asciminib, plus no food effect for simplified dosing. Management's confidence that efficacy confidence intervals at 320 mg and above don't overlap with asciminib's suggests potential superiority, but investors need concrete evidence that this translates to commercial viability against both generics and branded competition.

Safety Profile and Long-Term Tolerability: With physicians increasingly prioritizing safety and tolerability as critical factors for long-term efficacy in CML—a disease that has evolved into a chronic condition requiring years of treatment—TERN-701's favorable safety profile becomes a key differentiator. The company has reported hematologic adverse events as most common but less frequent than other therapies, with no dose relationship observed. Any additional safety data or longer-term follow-up will be closely watched.

Analyst commentary ahead of the release reflects cautious optimism tempered by execution risk. While the clinical data has been promising, the dramatic shift in analyst ratings—from 11 strong buys a month ago to just 3 currently, with 8 holds replacing what was previously unanimous bullishness—suggests growing concern about competitive dynamics, regulatory pathway clarity, or valuation following the stock's substantial appreciation.

Part 2: Historical Earnings Performance

Terns Pharmaceuticals has established a consistent pattern of exceeding analyst expectations across its last four quarterly reports, demonstrating disciplined expense management relative to Street projections. The company beat estimates by +20.00% in Q4 2024 (reporting -$0.24 versus -$0.30 expected), followed by beats of +10.34% in Q1 2025, +7.14% in Q2 2025, and +10.00% in Q3 2025.

This four-quarter streak of positive surprises, with beats ranging from 7% to 20%, reflects TERN's ability to control cash burn while advancing its clinical programs. However, the absolute loss per share has remained relatively stable in the -$0.24 to -$0.27 range over the past year, indicating the company is maintaining steady investment levels in its TERN-701 development program rather than accelerating or decelerating spending dramatically.

The year-over-year comparison shows losses widening from -$0.24 in Q4 2024 to an estimated -$0.29 for Q4 2025, a 20.83% increase that likely reflects ramping costs associated with expanding clinical trial enrollment and preparing for pivotal studies. This trajectory suggests investors should expect continued elevated cash burn as TERN advances toward registration-enabling trials.

Note: These figures reflect diluted GAAP earnings per share, reported before non-recurring items, and may differ from the non-GAAP figures used by some sources.

Part 2.1: Price Behavior Around Earnings

Terns Pharmaceuticals typically reports earnings after market close, meaning Day 0 reflects anticipatory trading before results are released, while Day +1 captures the market's first full reaction to the actual numbers and management commentary.

TERN has exhibited significant volatility around earnings events, with Day +1 moves averaging 4.93% in absolute terms and trading ranges averaging 11.54%—substantially higher than typical biotech earnings reactions. The most recent report on November 10, 2025, saw the stock surge +7.64% on Day +1 with an 11.92% trading range, reflecting strong investor enthusiasm for clinical progress updates.

The historical pattern shows mixed directional outcomes but consistently wide ranges, with Day +1 moves ranging from -6.74% to +7.64% over the past eight quarters. Notably, the stock has demonstrated a tendency for larger Day +1 reactions compared to Day 0 moves (4.93% versus 3.47% average), suggesting that management's commentary and guidance during earnings calls significantly influences investor sentiment beyond the headline numbers.

Investors should prepare for substantial two-way risk, particularly given the binary nature of clinical development updates that often accompany biotech earnings. The 11.54% average Day +1 range indicates that positions can swing dramatically based on trial enrollment updates, safety data, or regulatory pathway commentary.

Part 2.2: Options Market Expected Move

The options market is pricing an expected move of 2.43% through the April 17 expiration, which is substantially more conservative than TERN's historical average absolute Day +1 move of 4.93% and well below the 11.54% average trading range. This suggests options may be underpricing potential volatility, presenting possible opportunities for volatility buyers, though the 16-day window to expiration extends well beyond the immediate earnings reaction period.

Part 3: What Analysts Are Saying

Analyst sentiment on Terns Pharmaceuticals has undergone a dramatic shift, with the consensus deteriorated significantly over the past month despite the stock's strong price performance. The current average recommendation stands at 3.55 (between Hold and Buy), with the Street now divided: 3 Strong Buys and 8 Holds among 11 analysts covering the stock. This represents a stark reversal from one month ago when the consensus was 4.83 (near Strong Buy) with 11 Strong Buys and just 1 Hold.

The average price target of $54.75 implies modest 3.7% upside from the current price of $52.79, with estimates tightly clustered between a low of $53.00 and a high of $58.00. This narrow range and limited upside potential suggests analysts believe much of the near-term positive catalysts may already be reflected in the stock price following its substantial rally—the stock now trades 135% above its 200-day moving average of $22.42.

The deterioration in sentiment appears driven by valuation concerns rather than fundamental doubts about TERN-701's clinical profile. With the stock having more than doubled in recent months, analysts may be taking a more cautious stance ahead of critical regulatory discussions and pivotal trial initiation, recognizing that execution risk remains elevated for a clinical-stage company with no approved products or revenue. The shift from near-unanimous Strong Buys to a more balanced mix of ratings suggests profit-taking may be prudent at current levels, even as the long-term thesis around TERN-701's competitive differentiation remains intact.

Part 4: Technical Picture

Terns Pharmaceuticals enters earnings with exceptionally strong technical momentum, as the Barchart Technical Opinion maintains a 100% Buy signal—unchanged over the past week and month—indicating sustained bullish conviction across all timeframes. This unanimous positive reading reflects the stock's powerful uptrend, with TERN trading well above all major moving averages.

Timeframe Analysis:

• Short-term (100% Buy): Maximum bullish signal indicates powerful near-term momentum heading into the earnings event
• Medium-term (100% Buy): Continued strength in the intermediate timeframe confirms the uptrend is well-established beyond short-term fluctuations
• Long-term (100% Buy): Maximum long-term bullish reading reflects a complete reversal of the prior downtrend and establishment of a new structural uptrend

Strong and Strengthening trend characteristics suggest TERN is not only in a robust uptrend but that momentum continues to build, creating a technically supportive backdrop for earnings despite the elevated valuation concerns reflected in deteriorating analyst sentiment.

The stock currently trades at $52.79, positioned above its 10-day ($51.44), 20-day ($48.34), 50-day ($42.23), 100-day ($37.99), and 200-day ($22.42) moving averages, though slightly below the 5-day average of $52.90. This alignment with all major moving averages in proper ascending order represents a textbook bullish configuration, with each successively longer timeframe providing support at progressively lower levels.

The 200-day moving average at $22.42 now sits 135% below the current price, illustrating the magnitude of TERN's rally and suggesting the stock has entered significantly overbought territory from a long-term perspective. The nearest meaningful support level appears at the 50-day moving average of $42.23, representing potential 20% downside if the post-earnings reaction disappoints. Conversely, the tight clustering of short-term moving averages (5-day through 20-day spanning just $48.34 to $52.90) indicates recent consolidation near current levels, which could provide a launching pad for further gains on positive news. The overall technical setup is supportive heading into earnings, but the extended nature of the rally means any disappointment on clinical progress, regulatory timelines, or cash burn could trigger sharp profit-taking, while positive catalysts have room to drive the stock toward analyst price targets in the mid-$50s.